·

Total Qurate Retail revenue decreased 5% to $2.9 billion

·

Revenue decreased 5% in constant currency(2)

·

eCommerce revenue of $1.7 billion or 59% of total revenue

·

Qurate Retail reported diluted EPS of $(0.05)

·

Adjusted diluted EPS(3) of $0.27

·

QxH revenue decreased 4%

·

QVC International revenue decreased 1%

·

Revenue declined slightly in constant currency

·

Zulily revenue decreased 20%

·

Cornerstone revenue decreased 5%

·

Repurchased 50k of Liberty Interactive LLC’s 3.50% MSI exchangeable bonds in the quarter for $49 million

·

Focused on the safety and financial well-being of team members. Qurate Retail shifted all team members who could work from home to do so temporarily;  team members unable to work remote could choose to stay home with partial pay options; increased safety and sanitation protocols at fulfillment centers and live studios;

established an Emergency Assistance Fund for one-time grants to team members most impacted by the pandemic; and offered alternative work arrangements where possible when team members must manage unexpected pressures.

·

Closed retail stores to the public in March while broadcast studios and fulfillment centers remain open.

·

Rapidly adjusted product offerings, merchandising, marketing, and on-air and online programming. Meaningfully improved sales and new customer growth trends across business segments beginning late March in response to changes.

·

Incurred additional costs impacting margins, including appreciation and emergency pay for onsite team members (recently extended through May 31st); relaxation of productivity requirements in fulfillment centers primarily driven by enforcing social distancing; enhanced sanitation protocols; and increased reserves for potentially higher bad debt rates and customer returns.

·

Reduced planned spending, including an anticipated $30 to $50 million reduction in capital spend in 2020;  reduced discretionary expenses and hiring where possible.

·

Supported several COVID-19 relief programs, including donating airtime for public service announcements; creating a Small Business Spotlight program across TV, streaming and digital commerce channels to benefit vendors and small retailers; supporting global PPE-making efforts of a community of more than one million artisans; donating to relief programs globally, including Meals on Wheels and No Kid Hungry in the US, the Red Cross in Germany, and the National Emergency Trust in the UK; and creating customer- and team-member matching opportunities.

·

Qurate Retail has ample liquidity and a healthy balance sheet.

·

More information about Qurate Retail’s response to COVID-19 is available in the April 23rd press release and in the Q1 earnings presentation posted to our investor relations website.

(amounts in millions)

1Q19

1Q20

% Change

% Change Constant Currency(a)

Revenue

 QxH

$

1,857

$

1,792

(4)

%

 QVC International(b)

644

635

(1)

%

 -

%

 Zulily

397

316

(20)

%

 Cornerstone

187

177

(5)

%

Total Qurate Retail Revenue

$

3,085

$

2,920

(5)

%

%

Operating Income

 QxH

$

247

$

190

(23)

%

 QVC International(b)

79

80

 1

%

%

 Zulily

(13)

(20)

(54)

%

 Cornerstone

(7)

(11)

(57)

%

    Unallocated corporate cost(c)

(18)

(8)

56

%

Total Qurate Retail Operating Income

$

288

$

231

(20)

%

Adjusted OIBDA

 QxH

$

352

$

293

(17)

%

 QVC International(b)

101

97

(4)

%

%

 Zulily

17

 2

(88)

%

 Cornerstone

 3

(2)

(167)

%

    Unallocated corporate cost(c)

(13)

(6)

54

%

Total Qurate Retail Adjusted OIBDA

$

460

$

384

(17)

%

a)

For a definition of constant currency financial metrics, see the accompanying schedules.  

b)

Includes QVC Japan, QVC Germany, QVC UK,  QVC Italy and QVC France, which terminated its operations on March 13, 2019.

c)

Includes corporate costs incurred at Qurate Retail, Inc. but not allocated to any business segment. Approximately half of the unallocated corporate cost in the first quarter of 2019 related to a one-time legal settlement included in adjusted OIBDA.  

(amounts in millions)

1Q19

1Q20

Net income (loss)(a)

$

$

Adjusted net income(b)

$

$

Basic weighted average shares outstanding ("WASO")

Potentially dilutive shares

 1

Diluted WASO

GAAP EPS(a)

$

0.13

$

(0.05)

Adjusted EPS(b)

$

0.35

$

0.27

a)

Represents net income (loss) and diluted net income (loss) per share attributable to Series A and Series B common stockholders as presented in Qurate Retail’s financial statements.

b)

See reconciling schedule 3. 

(amounts in millions unless otherwise noted)

1Q19

1Q20

% Change

% Change Constant Currency(a)

QxH

 Cost of Sales % of Revenue

65.0

%  

%  

bps

 Operating Income Margin (%)

%  

%  

bps

 Adjusted OIBDA Margin (%)

%  

%  

(260)

bps

 Average Selling Price

$

$

%

 Units Sold

(3)

%

 Return Rate(b)

%  

%  

bps

 eCommerce Revenue(c)

$

$

 %

 eCommerce % of Total Revenue

%  

%  

bps

 Mobile % of eCommerce Revenue(d)

%  

%  

bps

 LTM Total Customers(e)

(4)

%

QVC – International

 Cost of Sales % of Revenue

62.6

%  

%  

bps

 Operating Income Margin (%)

%  

%  

bps

 Adjusted OIBDA Margin (%)

%  

%  

bps

 Average Selling Price

%

%

 Units Sold

%

 eCommerce Revenue(c)

$

$

%

 7

%

 eCommerce % of Total Revenue

%

%

bps

 Mobile % of eCommerce Revenue(d)

%

%

bps

 LTM Total Customers(e)

%

Zulily

 Cost of Sales % of Revenue

%  

%  

bps

 Operating Income Margin (%)

%  

%  

bps

 Adjusted OIBDA Margin (%)

%  

%  

bps

 Mobile % of Total Orders

%

%

bps

 LTM Total Customers(e)

%

Cornerstone

 Operating Income Margin (%)

%  

%  

bps

 Adjusted OIBDA Margin (%)

%  

%  

bps

 eCommerce Revenue(c)

$

$

%

 eCommerce % of Total Revenue

%

%

bps

a)

For a definition of constant currency financial metrics, see the accompanying schedules.

b)

Measured as returned sales over gross shipped sales.

c)

Based on net revenue.

d)

Based on gross US Dollar orders.

e)

LTM:  Last twelve months.  

1)

Qurate Retail’s President and CEO, Mike George, and Executive Chairman, Greg Maffei will discuss these  headlines and other matters on  Qurate Retail’s earnings conference call which will begin at 8:30  a.m. (E.D.T.) on May 7, 2020.  For information regarding how to access the call, please see “Important Notice” later in this document.

2)

For a definition of constant currency financial metrics, see the accompanying schedules. Applicable reconciliations can be found in the financial tables at the beginning of this press release.

3)

For definitions and applicable reconciliations of Adjusted OIBDA, Adjusted OIBDA margin, adjusted net income and adjusted EPS, see the accompanying schedules.

(amounts in millions)

12/31/2019

3/31/2020

Cash and cash equivalents (GAAP)

$

673

$

555

Indemnification Asset(a)

$

202

$

180

Debt:

QVC senior notes(b)

$

3,875

$

4,450

QVC bank credit facility

1,235

525

Total Qurate Retail Group Debt

$

5,110

$

4,975

Senior notes(b)

791

791

Senior exchangeable debentures(c)

1,447

1,417

Corporate Level Debentures

2,238

2,208

Total Qurate Retail, Inc. Debt

$

7,348

$

7,183

Unamortized discount, fair market value adjustment and deferred loan costs

64

(138)

Total Qurate Retail, Inc. Debt (GAAP)

$

7,412

$

7,045

QVC, Inc. leverage(d)

2.4x

2.4x

a)

Indemnity from GCI Liberty, pursuant to an indemnification agreement with respect to the 1.75% exchangeable debentures due 2046 (the “Charter exchangeable debentures”) issued by Liberty Interactive LLC (“LI LLC”), as described in this press release.  

b)

Face amount of Senior Notes and Debentures with no reduction for the unamortized discount.

c)

Face amount of Senior Exchangeable Debentures with no reduction for the fair market value adjustment. 

d)

As defined in QVC, Inc.’s credit agreement. Includes QxH, QVC International and Zulily.  

(amounts in millions)

1Q19

2Q19

3Q19

4Q19

1Q20

Qurate Retail, Inc. Operating Income (Loss)

$

288

$

336

$

(727)

$

287

$

231

Depreciation and amortization

153

158

146

149

142

Stock compensation expense

19

18

17

17

11

Impairment of intangible assets

 —

 —

1,020

147

 —

Operating company level transaction related costs

 —

 1

 —

 —

 —

Qurate Retail, Inc. Adjusted OIBDA

$

460

$

513

$

456

$

600

$

384

(amounts in millions)

1Q19

2Q19

3Q19

4Q19

1Q20

QVC

Operating income

$

326

$

$

$

$

Depreciation and amortization

118

Stock compensation

 9

Impairment of intangible assets

 —

 —

 —

147

 —

Transaction related costs

 —

 1

 —

 —

 —

Adjusted OIBDA

$

453

$

501

$

452

$

576

$

390

QxH Adjusted OIBDA

$

352

$

395

$

346

$

443

$

293

QVC International Adjusted OIBDA

101

106

106

133

97

Zulily

Operating loss

$

(13)

$

(23)

$

(1,042)

$

(13)

$

(20)

Depreciation and amortization

26

26

26

26

20

Stock compensation

 4

 4

 4

 3

 2

Impairment of intangible assets

 —

 —

1,020

 —

 —

  Adjusted OIBDA

$

17

$

 7

$

 8

$

16

$

 2

Cornerstone

Operating income (loss)

$

(7)

$

 6

$

(5)

$

 3

$

(11)

Depreciation and amortization

 9

 8

 8

 9

 8

Stock compensation

 1

 —

 1

 —

 1

Adjusted OIBDA

$

 3

$

14

$

 4

$

12

$

(2)

(amounts in millions)

1Q19

2Q19

3Q19

4Q19

1Q20

Qurate Retail, Inc. Net Income (Loss) (GAAP)

$

55

118

(770)

141

$

(20)

Purchase accounting amort., net of deferred tax benefit (a)

34

34

32

33

29

Operating company level transaction related costs, net of tax benefit

 —

 1

 —

 —

 —

Impairment of intangible assets, net of tax impact

 —

 —

881

113

 —

Non-recurring tax items(b)

 —

(34)

 —

(11)

 —

Mark-to-market adjustments, net(c)

62

87

34

 8

105

 Adjusted Net Income

$

$

$

$

$

Diluted earnings (loss) per share (GAAP)

$

0.13

$

0.28

$

(1.85)

$

0.34

$

(0.05)

Total adjustments per share, net of tax

0.22

0.20

2.27

0.34

0.32

Adjusted earnings per share

$

$

$

$

$

a)

Add-back relates to non-cash, non-tax deductible purchase accounting amortization from Qurate Retail’s acquisitions of QVC, HSN, Zulily and Cornerstone, net of book deferred tax benefit.  

b)

Includes impact of US tax reform and other one-time tax items. 

c)

Add-back includes realized and unrealized gains/losses on financial instruments, net of tax.

March 31,

December 31,

2020

2019

amounts in millions

Assets

Current assets:

Cash and cash equivalents

$

555

673

Trade and other receivables, net

1,440

1,854

Inventory, net

1,433

1,413

Other current assets

320

636

Total current assets

3,748

4,576

Investments in equity securities

72

76

Property and equipment, net

1,317

1,351

Intangible assets not subject to amortization

9,731

9,744

Intangible assets subject to amortization, net

886

955

Other assets, at cost, net of accumulated amortization

756

603

Total assets

$

16,510

17,305

Liabilities and Equity

Current liabilities:

Accounts payable

844

1,091

Accrued liabilities

907

1,173

Current portion of debt

888

1,557

Other current liabilities

174

180

Total current liabilities

2,813

4,001

Long-term debt

6,157

5,855

Deferred income tax liabilities

1,723

1,716

Other liabilities

716

761

Total liabilities

11,409

12,333

Equity

4,972

4,840

Non-controlling interests in equity of subsidiaries

129

132

Total liabilities and equity

$

16,510

17,305

Three months ended

March 31,

2020

2019

Revenue:

Total revenue, net

$

2,920

3,085

Operating costs and expenses:

Cost of retail sales (exclusive of depreciation shown separately below)

1,933

2,023

Operating expense

193

196

Selling, general and administrative, including stock-based compensation

421

425

Depreciation and amortization

142

153

2,689

2,797

Operating income (loss)

231

288

Other income (expense):

Interest expense

(97)

(96)

Share of earnings (losses) of affiliates, net

(36)

(45)

Realized and unrealized gains (losses) on financial instruments, net

(138)

(81)

Other, net

13

(8)

(258)

(230)

Earnings (loss) before income taxes

(27)

58

Income tax benefit (expense)

18

 8

Net earnings (loss)

(9)

66

Less net earnings (loss) attributable to noncontrolling interests

11

11

Net earnings (loss) attributable to Qurate Retail, Inc. shareholders

$

(20)

55

Three months ended

March 31,

2020

2019

amounts in millions

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings (loss)

$

(9)

66

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization

142

153

Stock-based compensation

11

19

Share of (earnings) losses of affiliates, net

36

45

Realized and unrealized gains (losses) on financial instruments, net

138

81

Deferred income tax expense (benefit)

(43)

(31)

Other, net

 4

 5

Changes in operating assets and liabilities

Decrease (increase) in accounts receivable

411

370

Decrease (increase) in inventory

(23)

(86)

Decrease (increase) in prepaid expenses and other assets

62

52

(Decrease) increase in trade accounts payable

(240)

(272)

(Decrease) increase in accrued and other liabilities

(317)

(246)

Net cash provided (used) by operating activities

172

156

CASH FLOWS FROM INVESTING ACTIVITIES: